Pala's Big Gamble: A SoCal Tribe's Casino Made Them Rich. But At What Cost?

When city folk daydream about ditching the rat race and settling down somewhere peaceful, they imagine a place like the Pala Indian reservation. Nestled near the base of Palomar Mountain in north San Diego County and just a few miles east of I-15, it's 12,000 acres of gorgeous hilly countryside and red earth. Roadside stands sell oranges and avocados. Prickly nopal cactus grows like weeds, surrounding ranches populated by cows, horses and even the occasional buffalo.

The majority of the tribe's 800 members lives on the reservation these days, and during daylight hours the town square, ringed by a mission church and a general store, feels sleepy and bucolic. But almost any hour of the day it's hectic at the Pala Casino, a short jog away, as hordes of gamblers — including many Asian senior citizens brought in on buses from San Diego, Orange County and L.A. — feed thousands of slot machines.

"Will anyone come out here to the middle of nowhere?" many Pala members wondered when the casino was built in 2001, followed by a sprawling hotel, on loans of more than $200 million. It has since become one of Southern California's most profitable gaming palaces.

Tribe members have benefited: Today, each receives monthly payouts that add up to more than $150,000 per year, as well as free health care and free college. Members who reside on the reservation don't have to pay state income tax. Though some still live in run-down homes, parts of the reservation feel like a posh suburb, as luxury cars cruise past a gleaming sports complex and administration building. Minors receiving payments via a trust often are presented with huge checks when they come of age, so long as they graduate high school.

But with big money has come some big problems: Longtime members have been kicked out, resulting in bitter feuds about who should be considered a member of the tribe, who deserves the payouts and even what it means to be Native American.

While the Pala casino has finally allowed the tribe's members entree to the American dream, it also has turned neighbors against one another — with devastating consequences.

David Duro grew up on the Pala reservation before casino gambling. Thirty years old and stout, with a tuft of chin hair, he looks not unlike a typical SoCal Latino guy, which is not uncommon for tribal members. (One Pala man notes with a laugh that he's sometimes stopped by Chicanos asking in rapid Spanish for directions.) Duro has a deep love for his family and his tribal culture, and the payouts — which members call "per capita" — allow him to focus on both.

When he was a kid, Duro's family lived in a small tract home, built by the federal Housing and Urban Development agency, and subsisted on rations like powdered eggs and government cheese. With tribal unemployment hovering around 40 percent, and roads that would wash out during rainstorms, Duro sought to escape the reservation, enlisting in the Army at 18.

It was peacetime then, but after 9/11 he was deployed to Afghanistan as a paratrooper for the Army's 82nd Airborne Division. Bearing an M4 carbine rifle as he trudged through the deserts and mountains, he dropped 25 pounds and learned to love MREs.

The Pala people have suffered unimaginable atrocities over the years — including being forced at gunpoint off their original land and relocated here at the beginning of the 20th century. But while Duro was gone, the Pala's luck began to change. By the time he returned in 2004, the monthly payments had begun.

Duro's parents more than doubled the size of their HUD-built home, while Duro, who found work as a tribal security guard, bought a BMW. He met his wife, Lupe, while getting it serviced at the Escondido dealership where she worked.

They're now raising her daughter, plus two kids of their own, in a freshly built, five-bedroom house with vaulted ceilings, a modern kitchen and rose bushes in the front yard. There's a Yukon XL SUV and Ford full-sized pickup in their driveway; in their fancy reservation subdivision, others have boats. Duro's wife and daughters have all but convinced him to put a pool in the backyard.

They can afford their home in part because of the tribe's generous housing program, which builds members custom houses on a reservation lot of their choosing and provides cheap home loans. Mortgage payments are deducted directly from their per capita payments. "Out in the city you're going to be paying a little more for a house like that," Duro says. "They kind of take care of you." (Anyone can live on the reservation, but only tribal members qualify for such programs. While Pala members don't have to live there to receive the payouts, they do if they want the housing subsidies.)

Duro quit his security job in the past year and now feels semi-retired, though he helps out with his father's construction business a few hours a week. He's contemplating another career, perhaps in law enforcement, and enjoys blowing off steam shooting target practice at Pala's gun range.

Mostly, however, he's focused on big-picture pursuits. He ran for tribal chairman in the fall, losing to longtime tribal leader Robert Smith by 100 votes or so. His great passion is his tribal song-and-dance group. His mother leads and he's the head singer, performing traditional songs at powwows, birthdays, anniversaries and other events around the country.

Though some observers had speculated that casino wealth would cause tribal members to lose touch with their customs, in Duro's case the opposite seems true. Without a job, he's been afforded an opportunity to connect with his culture, which had long been in danger of obsolescence. "You got kids and even adults that, if you talk to them in Indian, they don't really know what you're saying," he says. "They're, like, 'Huh?' "

But he knows these are the salad days. "It's important to teach the kids not to rely on the casino, don't rely on the per capita," Duro says. "Yes, it's a blessing, but it's not promised."

There are hints that the end may already be coming. The tribe's payouts dropped last year, and the casino's business model seems threatened. Critics of the tribe's leadership say it's no coincidence that a huge swath of Pala's members have been dropped from the rolls in recent years. Less money coming in, they say, has caused the leadership to take desperate measures to maintain the status quo — a witch hunt resulting in the removal of about one-sixth of the tribe, for supposedly lacking sufficient Pala blood.

The leaders deny any connection between falling revenue and the disenrollments, but the tribe has been split into a two-tiered society: the haves and the have-nots. The two factions grew up together, went to school together and, in many cases, live practically side by side. The only difference is that some of them get $150,000 per year, and subsidized home loans, and free college.

The others get nothing.

On St. Patrick's Day morning, the scent of sage drifts out of the Pala Mission church. "I can't wear green, because it's Lent," says the priest, to laughs, addressing a tightly packed congregation that includes Native Americans and worshippers of other races. "So I had to wear purple."

The church was established by the Spanish 200 years ago in an effort to, well, save the damned. Today it's the only one in the country still ministering predominantly to Native Americans. In fact, hardly a despised symbol of colonialism, it's the heart of the reservation, the spot where locals come to pray and be married.

A charming, low-slung white edifice with Native American–motif tiles on the floor, its facility also contains a museum and a gift shop. In the adjacent colorful cemetery, one headstone reads "Always on My Mind" with an engraving of Elvis; carved into the grave marker next to it is a slot machine that has spun a 7-7-7. And why not? Many tribal members feel understandably lucky.

The service kicks off just after 11:30 a.m. when King Freeman, owner of the Pala general store across the street, rings the mission's bell, located in a freestanding, 35-foot-tall tower. Freeman, 77, has a thick, inspiring crop of white hair. A former tribal chairman, his given first name, Reyes, means "Kings."

"When I was born, [family members] said, 'I guess he's going to be king of Pala,' " he says.

Like the majority of the Pala, Freeman descends from a tribe called Cupeño — the Spanish bastardization of their native name, Kuupangaxwichem. Originally the Cupeño were based on land 40 miles east, near the hot springs at Warner's Ranch. But in 1901, in a case that went all the way to the Supreme Court, the Cupeño were evicted, later forced to pack up their possessions and hastily move to the current Pala reservation — their own Trail of Tears.

Making matters worse, the new spot was already occupied by members of a tribe called the Luiseño, who hadn't been told they'd have company. Though tensions flared, the tribes later united as the Pala, and in the 110 years since have made the best of a tragic situation. Some tension remains: Cupeños and Luiseños generally are buried in separate locations, for example, with the burial ground next to the mission referred to as the "Old Luiseño Cemetery." (Members with other tribal heritage are part of Pala as well, and many have mixed bloodlines.)

Freeman's grandmother was a young girl during the forced evacuation. "We all have to leave some time," he says philosophically.

Born in a house less than 100 feet from his store, Freeman has lived almost all of his life on the reservation. A few decades back, he recalls, it contained fewer than 60 dwellings. He's seen, and in many cases overseen, its infrastructure buildup, including upgraded water and sewer systems.

But it was under the tenure of the current tribal chairman, Robert Smith, that the casino and its spoils came to Pala. And it is with Smith that Freeman maintains a caustic bloodline dispute, involving Freeman's great-grandmother Margarita Britten, a basket weaver so beloved that roads in the village are named for her.

At issue? Whether Britten's father was white rather than Indian. Under tribal rules, members must possess 1/16 "Pala blood," based on a "blood quantum" system of dubious scientific merit borrowed from the colonial-era U.S. government.

It's a bizarre system, one that will inevitably whittle the tribe to nothing, and the opposite of the so-called "one-drop rule" of the segregation era, in which anyone with any African ancestry at all was considered Negro.

The tribe's executive committee not long ago decided that Britten's father was, in fact, white — meaning that more than 160 of Britten's descendants were expelled, and no longer eligible for per capita payments or other benefits. (One of the committee members, Annalee Trujillo, was excluded from the decision-making process because she is a Britten descendent; the committee's decision removed her from the tribe as well.)

The bulk of those people received a letter on Feb. 3, 2012, signed by Robert Smith, announcing they'd been disenrolled. Health benefits would be terminated less than one month later.

These types of removals have occurred routinely in California during the casino era. Pala's neighbor, the Pechanga Band of Luiseño Indians, which also has a successful casino, has shed even more people than Pala in recent years. Meanwhile, the Chukchansi tribe of Central California disenrolled about half of its 1,800 or so members. When tribal council members defeated in 2012 elections refused to recognize the winners, the newly elected officials proceeded to break in and occupy their equivalent of City Hall — a trailer — followed by the opposition attempting to smoke them out with tear gas and a burning log. A brawl broke out before police intervened and removed both sides.

Pala's decision was widely decried — with greed, not genetics, suspected as the motive. Casino revenue, after all, was believed to be dropping: The monthly per capita payments were cut by $500 in January 2012, just one month before many disenrollment letters were issued. What better way to keep payments high than to reduce the number of people receiving them?

Following the removal, a group of more than two dozen tribe members sued Smith and the other executive committee members in federal court, demanding to be reinstated. They're claiming $80 million in damages. Pala's leadership, they say, engaged in a conspiracy against them, deprived them of their civil rights and sought to enrich themselves. "Defendants' actions arose from their desire to eliminate political and personal enemies and for personal gain," the lawsuit says.

But state and federal courts have declined to intervene in such matters, citing tribes' sovereign immunity. The judge dismissed the suit in March; his decision is now under appeal.

Smith, the tribal chairman, insists that money was not the reason for the disenrollments. "Probably since 1989 there was a question" of the Britten descendants' bloodline, he says. "It was just a question that needed to be taken care of. It went too long." (A former committee member, Kilma Lattin, seconds this notion.)

While Freeman himself was not disenrolled, his three children and their families fell below the bloodline threshold and were removed from the tribe.

Freeman believes it was personal.

"He and I don't get along," Freeman says of Smith. "There's other families that should be looked into, too. But this was just a sign of a personal problem."

Neither Freeman nor Smith would discuss the details of their spat. But Freeman and his allies had long been vocal in their criticisms of Smith's chairmanship.

Tensions flared publicly in May 2011, when Freeman drafted a petition to remove executive committee vice president Leroy Miranda from his position. Freeman himself had run against him for the job, and lost, and now sought to disqualify the winner on the grounds that he'd been convicted of soliciting a male prostitute two years earlier. This dispute, insiders believe, set off a chain of events leading directly to the disenrollments. Soon after, the lawsuit contends, Smith announced to Freeman at a council meeting, "Your kids are off the rolls."

Days later, the Pala executive committee announced its first wave of disenrollments: Eight Britten descendants were removed from the tribe, including Freeman's three children. The following year, 154 others got the ax.

Normally, disenrolled tribe members can appeal to the intertribal court of Southern California. But just before removing the members, the executive committee had pulled out of that regulatory body.

That left the tribe's executive committee answering to no one but the remaining voting members. While the Bureau of Indian Affairs suggested Britten's descendants be reinstated, the committee had the right to ignore the bureau — and did.

Hit by financial catastrophe, many of the removed still live on the reservation, side by side with tribal members in good standing. Many of them feel anger not just toward the executive committee but also toward the members who stood by and let it all happen. The suit claims they've been "shunned and harassed by members of the Pala community."

One disenrollee, Paul Johnson, has seen his life upended. The per capita money had helped the 56-year-old Vancouver, Wash., resident build a recording studio and work with bands — his dream job. But since his removal he's been forced into bankruptcy. His "big, beautiful" home — which he bought near the height of the real estate bubble — is facing imminent foreclosure. He and his wife have moved in with her parents, and he's closed the studio and taken a job as a retail manager.

His brother Kenneth, meanwhile, was living in a house on the reservation he'd received from his uncle; upon Kenneth's disenrollment, he was forced to leave because the land it sat on was owned by the tribe. Before long the house was demolished. "There's nothing there now," Paul Johnson says.

The disenrolled members even fear they won't be able to be buried in the tribal cemetery.

Johnson's young cousin, meanwhile, is mocked on the reservation. "People were pointing and laughing at her as she walked down the street because she lost her money," he says.

Nowadays, Freeman's store serves as something of a political opposition headquarters against Smith and his allies. During election season last fall, signs for the candidacy of David Duro and others hung inside.

But even when it's not political season, Freeman spends his days there manning the store and chatting with friends and family, about everything from the Smith dispute to world events to how various people are faring at the slots.

Freeman often holds court from a folding chair near the meat counter, where "Rez Dogs" are on offer for $1.50, $2 with chili. His grandfather opened the small food and supplies mart in 1928, and it has seemingly seen few updates since then. In the parking lot out front, a long-neglected sign advertises relics from its past: "genuine Indian jewelry," "curios" and "Levis."

With the arrival of a mini-mart and Subway next to the casino a few years ago, the Pala Store's services are clearly no longer critical to the reservation, and Freeman himself has little financial need to work. But he enjoys providing employment to a half-dozen workers and hobnobbing with folks who come in.

People like his son Anthony, who arrives now, tall in blue jeans and wearing a mustache. He has in tow his own son, who wears braces and begins flirting with the girl working behind the counter.

Anthony himself suffered a violent incident in September 2010, when a pair of masked men broke into his house, hit him with a blunt instrument and choked him until he passed out. When he awoke, his arms and legs were bound; he spent a few days in the hospital. The perpetrators were not found, but King Freeman suspects it had something to do with the ongoing tensions in the community.

A toxic tension continues to bubble on the reservation. A website called Pala Watch, run by disenrolled Pala member Joseph Harris (who is also a plaintiff in the lawsuit), calls the removal "our Second Trail of Tears." Paul Johnson calls it "paper genocide."

The comments on Pala Watch and another Native American watchdog site, called Original Pechanga, contain deeply personal criticisms of Smith. "How that man can live with himself I don't know," wrote one anonymous commenter on the latter site. "What Smith and the [executive committee] have done to the [disenrolled] and their families is indescribable."

Some of those who are still enrolled remain paranoid; in interviews, Luiseño descendants say they have heard whispers that they could be next to be cut from the rolls.

Smith, for his part, has said no more disenrollments are coming, but many are unconvinced. Some Pala members in good standing are unwilling to speak for attribution against Smith, for fear they will be cut and, effectively, have their lives as they know them ended.

"The threat of disenrollment is very powerful," Paul Johnson says — making serious political opposition hard to assemble.

Despite the criticisms, Smith remains popular with the tribal members at large. He has been chairman since 1990, winning election after election every two years.

Smith carries an air of gravity but doesn't come off as pretentious. A Harley rider with tattoos on his arms — including those commemorating the year Pala was established (1895) and a deceased nephew — he seems older than his 52 years. He walks tentatively, with plastic braces on both legs.

Despite speaking in short, clipped sentences, he isn't afraid to get wonky; though he lacks a college degree, he has taught himself the complex issues he's dealt with on behalf of the tribe, everything from water rights to health insurance to financial investment strategies. He offers the reassurance of a politician: He knows how to tell you what you want to hear.

Also like a politician, however, he doesn't always offer a straight story. After his first interview with the Weekly, he cagily declined a follow-up conversation. The reporter and photographer heading to the reservation were subsequently informed that reservations at the Pala Hotel had been canceled, at Smith's behest. Pressed for an explanation, Smith mentioned fears that the story would focus on the disenrollment. Then, claiming to be too busy to elaborate, he abruptly hung up.

In person, however, he's completely cordial. As he speaks, he gestures to the gleaming tennis courts, athletic center and pair of ball fields, which include state-of-the-art batting cages. (Softball is beloved on the reservation.) "We wanted the sports complex, because our kids are in there, swimming, playing basketball and baseball," he says. "And we also got health insurance right away for the members. Now we're self-insured. [Members] just pick their doctor and pay their co-pay, and it's all taken care of."

His job security is strengthened, of course, by casino profits. Then–President Ronald Reagan signed into law 1988's Indian Gaming Regulatory Act, and a 2000 California ballot proposition opened the doors in the state. In 2011, the most recent year for which statistics are available, Native American gambling revenues were $27.4 billion — $6.9 billion in California alone, more than any other state.

Southern California is something of a gaming mecca, with a half-dozen or more high-traffic casinos. But others haven't struck the jackpot, like the Santa Ysabel Casino, which filed for bankruptcy last year.

The national success stories get the most media play — particularly the Mdewakanton Sioux tribespeople of Shakopee, Minn., whose casinos provide them with more than $1 million in per capita payments annually. But there are only a few dozen casinos at most nationally whose success approaches Pala's. Of the 560 or so recognized U.S. tribes, fewer than half have gaming, and the vast majority provide no or very little per capita money. (Revenue statistics for most individual tribes, including Pala, are not made public.)

Smith deserves much credit for the tribe's success, and Pala's government has been aggressive about building its infrastructure. The reservation's administration center, sports complex, radio station, gigantic fire station and other community amenities were built at a cost of many millions of dollars, while the staff on the tribe's payroll has mushroomed since the casino opened in 2001. (Executive committee members have even been known to get around by way of the tribal jet.) Pala also has donated hundreds of thousands to area school districts.

Smith says the tribe has more than $100 million in outstanding loans. He adds that the tribe has nonetheless socked away "millions" in reserves to make up for potential shortfalls.

But after a revenue-growth peak for California tribal gaming in the early aughts, rates began to slow throughout the decade, finally beginning to decline in 2008. As the recession lifted in 2011, California Indian gaming revenues grew by 2 percent, but that was after three straight years of falling revenue and does not represent a return to form, says Dr. Alan Meister, an economist with consulting firm Nathan Associates, who specializes in Indian gaming.

Unlike the massive Pechanga casino up the road, whose dance club features bottle service and women in the rafters dancing behind screens, the Pala Casino isn't particularly glitzy. Chinese, Vietnamese, Filipino and Korean emigrants are courted; the casino hosts a pageant called Mrs. Vietnam Global, and in February buffet diners were interrupted by a massive Chinese New Year celebration, complete with a half-dozen dragon puppets bobbing up and down across the room.

Though young and middle-aged attendees flock to shows like Chris Rock and Lauryn Hill, mostly the target demographic is older folks, with acts like Tony Bennett and Don Rickles, and a "60-Plus Club" offering seniors a buffet discount and passes to the Neil Diamond tribute.

"We're really conservative," Smith says. "We don't want to have some cage fight and people come in there and get all drunk and they don't gamble and there's more problems and you don't make no money."

But shifting demographics could hurt the Pala. A new generation of gamblers often prefers to play online rather than at brick-and-mortar casinos. As L.A.-based casino marketing consultant Michael Meczka put it in a New York Times article last year about the near-collapse of a Connecticut mega-casino: "There aren't any new customers out there. Gaming is an aged community. ... Anyone who has ever wanted to try a casino has tried a casino." (In the Connecticut tribe, per capita payments to members ended in 2010.)

Not everyone agrees with this prognosis. Economist Meister, for instance, isn't so bearish. "The question for the industry is, 'How do they accommodate the new generation of gamers?' But while that's in transition, it's still an open question," he says.

Like many tribes, Pala members desire a foothold in Internet gambling. Its lobbyists are seeking to seize a large share of the industry for Native Americans, should it be legalized in the United States.

"We have our finger on the pulse and we're involved politically," Smith says. Though Pala's millions have made the tribe a major player, it hasn't always been successful — in 2008, for example, it failed to defeat ballot propositions allowing its competitors more slot machines.

Meanwhile, new casinos continue to open in California. Last year Gov. Jerry Brown approved gaming plans for a pair of Northern California tribes, even though their casinos would be built on property outside of their reservations, near highways. "I call it off-reservation gaming," says Smith, who fears a precedent. "I'm a firm believer you should be on your own original land."

All of these factors could erode the Pala casino's revenues. And while a robust ecosystem now allows many members to live their dreams, others haven't spent their money wisely.

Lottery winners are notoriously likely to lose it all — a 2010 study of Floridians who had won up to $150,000 in the lottery showed they were twice as likely as non-winners to file for bankruptcy. At Pala, stories abound of those who have burned through windfalls and re-entered poverty, their cars repossessed or their drug addictions fed. While the tribe requires minors receiving their trust funds to receive a financial planning class, it's only one day long.

Many who have retired early, or taken on less remunerative work, have nagging doubts. They worry that they should go back to school, or that they should find gainful employment sooner rather than later. There are storm clouds coming, they worry.

"These young people think it's going to go on forever, but it's a business," King Freeman says. "A business is a business, I don't care what kind — it can go broke."

For former members of the Pala tribe, there is little reason for optimism. Along with the humiliation of having their cultural identity officially severed, they have been told they didn't win the lottery after all. Absent a sea change in tribal leadership, their fortunes are unlikely to change.

For the current tribe members, however, these are fortunate times, and many don't share the pessimism of people like King Freeman. This group includes Kilma Lattin, the former Pala executive committee member.

Like Smith, with whom he served on the executive committee until two years ago, Lattin is a controversial figure in the tribe. In 2011, he voted for the initial round of eight disenrollements, although after being presented with more evidence supporting the claims of the Britten descendants, he had a change of heart.

"I could no longer say to myself, unequivocally, that they should be disenrolled," he says. "So, I did not seek re-election to the executive committee because I knew the disenrollment was coming and I didn't want to be a part of it." The group of 154 members was removed shortly after the arrival of his replacement in early 2012.

But despite this crisis of conscience, Lattin continues to believe in the tribe and its potential. He insists that Pala will remain strong even if its gambling interests don't.

"Nothing makes money like a casino, and people know that," he says. "But Pala is a unique tribe because we have a diversified economic basis. We were diversified before we had the gaming enterprise and we will be diversified in the future."

To demonstrate, the flashy 34-year-old gives a tour of the reservation on a clear, bright day in late winter. Driving a BMW sport utility vehicle, he wears Prada sunglasses and drinks a high-protein milkshake, which he flicks into the back when it's drained.

Born in La Jolla, Lattin flew Apache helicopters for the U.S. Army Air Cavalry and later earned an MBA from the University of Southern California. In the mid-aughts he became involved in tribal governance, bringing a sometimes confrontational style to the proceedings. (At one time the proud owner of a yellow Lamborghini, he thought tribal speed limits should increase to 80 miles per hour. )

He points out the various businesses that the tribe runs, including a shooting range and thousands of acres of citrus and avocado groves. There's a sprawling motocross track and a skateboard park, and a sand and gravel operation. It's come to the point where one hardly needs to leave the reservation, for work or for leisure.

"The magic for Pala, I believe, is that we have a sense of financial responsibility," Lattin says, "where we've taken our proceeds and plowed them back into future economic development for growth."

Lattin has been involved in projects ranging from advising an Emmy-nominated documentary about Native Americans in the military to co-founding the Native American Republican Super PAC. He's currently not working. "I'm assessing my options," he says.

Though he no longer serves on the council, and recently left the reservation to move to San Diego, he continues to think about big-picture ideas for Pala. Reservations once may have been seen as dens of poverty and despair, but he believes they are potential utopias.

"Tribal governments have to be savvy both in business and government," Lattin says, "and in good tribal governments like Pala, they're able to react and feed off each other."

Of course, the question of whether Pala's government has acted in the best interest of all its people, rather than just some of them, is hotly debated.

And for all of Lattin's optimism, it's ironic that, after centuries of repression and mistreatment from outsiders, it was Pala's windfall that caused the tribe to turn on itself. Only time will tell whether these millions — gambled and lost by outsiders — have been the tribe's saving grace, or its undoing.